Nuveen launches suite of semi-transparent active ETFs
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Nuveen has launched three active equity exchange traded funds that shield portfolio holdings from daily disclosure, in a move that underlines the US asset manager’s continued focus on innovation.
The Santa Barbara Dividend Growth, Winslow Capital Large-Cap Growth ESG and Small Cap Select ETFs are each a clone of an existing mutual fund, and will be the New York-based manager’s first active ETFs. The shop debuted its ETF family in 2016.
Product innovation across vehicles has been a big priority for Nuveen since it finished integrating its legacy business into TIAA’s, said Jordan Farris, managing director of product management and development for the manager’s global equities and ETF platforms.
For example, in April, the company completed its $575m initial public offering of the Nuveen Core Plus Impact Fund, which Nuveen calls the first impact-investing closed-end fund. In 2019, the company added to its suite of ETFs with ESG-integrated broad-based index strategies.
Assets in Nuveen’s ETFs, 10 of which are ESG-focused, ballooned from $1.1bn at the start of 2020 to $4.1bn at the end of July, according to Morningstar Direct. Net sales totalled $2.6bn during that timeframe.
“We’re really on the forefront of investor demand for integrating ESG into ETFs,” Farris said. “Now we’re expressing that innovation in active semi-transparent ETFs.”
Nuveen has watched the mass of active ETFs come to the market in recent years, he said, driven by two initiatives that occurred in 2019: the so-called ETF Rule, which streamlined the process of bringing ETFs to market and the Securities and Exchange Commission’s approval of non-transparent or semi-transparent structures. During the first half of 2021, 127 active ETFs launched. Among those sponsoring the new products are 24 firms entering the active market for the first time, according to NYSE data.
That figure also includes 17 non-transparent ETFs, the data show. The 37 portfolio-shielding products on the market collectively held $1.8bn in assets as of June 30. In all, they added $625m in net sales during the first half of 2021.
Like many of its peers in the active mutual fund market, Nuveen assessed which funds in its library of strategies were feasible in an ETF as well as which ones might find an audience in the ETF-orientated investor market, Farris said.
“While we’re seeing this change in how investors consume active management, we want to make sure we are meeting clients where they want to be met,” he added.
Expanding into active ETFs has helped Nuveen tap into investors that it was previously unable to reach through its suite of active mutual funds and index-based ETFs, Farris said.
Nuveen plans to develop both active and passive ETFs, Farris said.
The manager has a fourth non-transparent ETF that is still in the development queue, a growth-orientated strategy. Unlike its three siblings, the forthcoming ETF is not a clone of an existing fund.
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